VA Loans and Credit Scores

Have you seen the Remax Commercial that says “when he gets home… we’re going to buy a new home!” And then it pans to the guy overseas, and he’s looking for homes on the Internet! We LOVE that Commercial!

Our advice? If you’re one of those folks looking forward to taking advantage of your VA Benefits, check out your minimum credit score!

The Veteran’s Administration does not actually make VA home loans… but they INSURE them. Because of this, the VA gives guidelines for who they will ensure, and what their credit scores should be.

I’ve said that “it’s the Golden Rule” because the Banks are the ones who are setting their OWN guidelines about who they will loan money to and under what circumstances – they are using “overlays” to approve VA Loans.

For the past few years, we’ve seen Veterans that could not get approved, because the BANK had tighter minimum credit score requirements for VA loans than what the Veteran Administration would approve.

Minimum Credit Scores for VA Loans 2013

In recent months, we’ve seen more and more Lenders loosen the standards for VA Loan Approvals. Veteran’s who have scores UNDER 620 still require more paperwork and offsetting factors, however we CAN get VA Loans approved with credit scores between 600 and 619.

The Veteran’s Administration doesn’t really have a minimum credit score requirement – however for the last few years we’ve seen very few cases where a Veteran with scores below 640 getting an Approval. This changed in the fall of 2013, and we are seeing VA Loan approvals for Veterans with minimum credit scores between 600 and 640. It seems like the VA Home Loan Eligibility requirements have gotten a little easier, which is GREAT news!

Also – prior to this fall, VA Loans with credit scores below 640 “priced out” with mortgage interest rates significantly higher. We are now offering “best rates” to those with scores down to 620, and find that we are only having a slightly higher mortgage interest rate offered for those from 600 to 619.

Waiting Period For VA Loan Approval After a Bankruptcy or Foreclosure

If the Veteran experienced a traumatic credit event and was forced to file Bankruptcy, it is possible to purchase a home. After a Chapter 13 that did NOT involve a residence in the Foreclosure, VA will allow a Veteran to purchase after only 24 months. We have seen a few cases where we could get a Veteran approved after only 12 months – but those cases are rare. We have not seen any waivers granted on the 2 year waiting period if the Veteran surrendered a home as part of the Bankruptcy.

We have seen VA guidelines that say they will approve a Veteran for a VA loan if they are IN a Chapter 13 Bankruptcy – however, to date, we’ve only been able to get ONE of those approved. The Veteran was involved in a Restaurant where a partner embezzled funds – it was a very specific situation that did not ruin ALL of the Veteran’s credit, only the credit tied up in the Restaurant. We had a TON of documentation. So while this CAN be done, it takes a VERY special situation to make it happen. In general the waiting period for getting a VA loan after filing a Chapter 13 Bankruptcy is 24 months from the date of discharge.

Veterans who had a Foreclosure or Short Sale will be required to wait 24 months from the time the recording of the property changing hands. This could be a different date than the one where the judge says you must surrender the property. Some banks, especially in very high foreclosure areas like Florida – waited 5 and 6 months before they finally transferred title on homes.

If you have questions about Minimum Credit Scores for VA Loans 2013 and getting pre-qualified for a home in NC with a VA Loan – call Steve and Eleanor Thorne, 919-649-5058. We genuinely appreciate your willingness to Serve – and encourage you to either call us with questions, or leave a comment below – I try to answer all questions promptly!

About Eleanor Thorne

I see myself differently than most loan officers in the Cary/Raleigh market. As a rare Cary native, I see myself as an expert on the area, on mortgage industry changes & factors that effect rates! I’ve lived in Cary since 1968 – and I’m second generation “mortgage.” I work with my husband, Steve Thorne Mortgage Loan Originator #60596 Equal Housing Lender

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